An efficiency dividend is an annual reduction in resources available to an organization. It is usually applied as a percentage of operational (running) costs. It has been used by the

Australian Government The Australian Government, also known as the Commonwealth Government, is the national government of Australia, a federal parliamentary constitutional monarchy. Like other Westminster-style systems of government, the Australian Government ...

on Australian Public Service departments and agencies since 1987. Some departments and agencies have been exempted.

History

A 1.25% efficiency dividend was introduced by the Bob Hawke Government in 1987-88. It was reduced to 1% from 1994-95 to 2004-2005 then increased to 1.25% from 2005-06. For 2008-09 a one-off 2% efficiency dividend on top of the ongoing efficiency dividend was applied. In 2011-12 it was 1.5% and in 2012-13 another extra one-off 2.5% was applied.

Controversy

Proponents of the efficiency dividend argue that it improves the cost effectiveness of the public sector, allows managerial flexibility in the allocation of resources, and is a good way to generate savings in the cost of public sector administration. Critics have described the efficiency dividend as a blunt instrument, a false economy, and lazy budgeting. Smaller agencies have also highlighted the difficulty in finding such savings.

References

{{reflist Government of Australia Government finances in Australia History of finance Economic history of Australia Political history of Australia